Quick Thoughts: Midnight Madness

At least for now, the US government has avoided a shutdown. Stephen Dover, Head of Franklin Templeton Institute, opines on what may come next after this temporary resolution, and the impacts on the markets.

At the last minute—and not proverbially—Congress passed, and US President Joe Biden signed into law, a 45-day continuing resolution, authorizing US federal government spending until mid-November, avoiding a much-anticipated government shutdown.

Markets are apt to breathe a sigh of relief. After all, a prolonged government shutdown could have led to a dip in spending and, worse, might have ultimately snarled key government services in finance, transportation, and a broad array of services.

But the relief is likely to be short-lived. Saturday’s compromise continuing resolution is short term and may presage another round of political wrangling and brinksmanship in six weeks’ time.

In what follows, we offer a few observations for investors about how to think—and not overthink—the impact of midnight politics on their portfolios.